Dropping EV prices: Why you shouldn’t buy an ICE car after 2025

New research has predicted by 2024 it will cost no more to manufacture a battery electric vehicle than a conventional ICE vehicle.

That moment, according to the author of the research, investment bank UBS, will be pivotal.

“There are not many reasons left to buy an ICE car after 2025,” Tim Bush, a UBS analyst, told The Guardian.

The drop in battery prices will lead to a rapid acceleration in BEV take-up, UBS predicts. By 2025 they will account for 17 percent of global sales and by 2030 their share will be 40 percent.

BEV sales are already booming in China and the European Union. In the latter, EVs and hybrids are expected to account for one million sales in 2020 out of a total of 11 million.

UBS says it will cost just US$1900 ($2700) more to manufacture a BEV in 2022 compared to an ICE vehicle. That will drop to nothing by 2024.

UBS predicted battery costs will drop below US$100 ($140) per kilowatt hour by 2022, a pricing benchmark long held up as a key competitive moment for BEVs. Tesla and others claim they’ll eventually go much lower than that.

Currently, batteries account for up to 25 percent of the cost of a BEV.

The research is based on detailed analysis of batteries from the seven largest manufacturers, including China’s CATL, Korea’s LG Chem and Japan’s Panasonic.

UBS predicted tardy auto manufacturers who delay a commitment to BEVs risked being left behind by committed rivals such as Tesla and Volkswagen, which is investing 33 billion Euros ($55 billion) into electrification.

UBS also predicted lowering battery costs would spell the end for hybrid vehicles that combine both electrified and ICE propulsion because they would become too expensive.

Currently there’s little sign of a reduction in BEV prices in Australia. The MG ZS EV will be the cheapest sold in Australia when it goes on-sale within weeks.

It will be priced from $46,990 drive-away, about double the cheapest model in the line-up.